Wednesday, September 17, 2008

Wednesday Wanderings: NHL in Europe, Economics

by Jes

Once upon a time, I wrote a pretty length post on why I believe the NHL would never work, on a full-time basis, in Europe. Playing an exhibition game or two is one thing, but a full season? It ain't gonna work.

Since I can't find my original post, I'll just have to rehash some of my old arguments. Most of my European hockey knowledge comes from the leagues I follow (Czech and Slovak), so I may not be totally right when it comes to places like Finland and Sweden.

1. Ticket PricesThe average ticket price for a European club hockey game translates to about 10-25$ US. Most teams charge very little for their tickets, knowing full well that a. the people simply don't have that much money to spend and b. knowing fans won't spend that much for a hockey game.

European clubs make their money almost primarily through sponsorship. You see it on their uniforms, their arenas, and even their team names, which are often sponsored. The NHL's model of ticket-heavy revenue is the complete opposite of what happens in Europe.

Let's face it, most hockey fans in Russia, Czechia, and Slovakia do not have that much disposable income. I know people in Germany and Sweden could afford $60 tickets, but would they really fork out that much for 30-40 games a season? I doubt it. Once the novelty wears off, you'd likely see a lot of empty seats. I can't see 15,000 people in either city wanting to invest that much on the NHL.

Yes, I realize some European teams get over 10,000 per game, but the ticket prices, like I said, are quite low compared to the NHL.

The fact is that many of the rich KHL owners we hear about are oil robber barons or diamond mine owners, and spend money on their hockey teams as an expensive hobby. There aren't an endless supply of these oil barons, nor are many of them likely to want to spend NHL-level prices for their own pleasure. Yes, there are oil barons owning soccer clubs, but you know they make a lot of money from tickets and merchandise.

2. TravelIn the future, I see travel becoming even more of an issue than it is now. Fuel prices will not go down any day soon, and environmental concerns will only cause sports leagues to look into curtailing travel somewhat.

In my view, fuel prices will cause the NHL to start playing even more intra-conference games, and try to eliminate some of the cross-country road trips that suck up so much gas.

Traveling to Europe? Yeah, that would count as a long road trip, and it's certainly quite pricey if you do it constantly.

3. RivalriesHaving an NHL team negates one of the reasons Europeans go to hockey games: The rivalries. Slavia and Sparta's "derbies" just could not be replicated by a bunch of foreigners playing some team from Toronto or Helsinki. Inter-city and regional rivalries would just not exist in the European NHL.

4. Gary BettmanD00d screws up everything he touches.

Yes, I am a pessimist. Given how the NHL's short-term thinking has caused them so many problems, and given how many American franchises are far from strong, I think expanding into Europe is something the league just will not succeed at. Let the Europeans have their league and focus on making the NHL stronger, rather than even more watered-down than it is.

If you are an UFA-to-be, you might want to think about re-signing rather than try the open market. Just a thought.

On a side rant, this whole "crisis" is thanks to your lovely US government. For far too long, the US Government has let corporations run the country, including a highly-unregulated bank and finance industry. This, together with people's horrible spending habits, means that there is a lot of "artificial" money in the market that can never be repaid, and you have China owning a monster chunk of US Currency.

Not to sound too much like a smart ass, but I always figured the US was set for a major collapse. No country can take on that much government and personal debt without the whole thing busting up eventually. Until people stop spending money they don't have, and until banks stop lending money they don't really have, the economy is not going to get better. I'm thankful that Canada had a bit more restraint, and isn't spending billions on a bogus war to inflate the pockets of a well-off minority (Do you really think Bush wants to drive down the price of oil? Ha!). That said, when the US economy tanks, it'll hit our country hard.

(If you know basic economics and finance, than you know that a bank can take $1 of deposits and turn that into $7-10 of loans, hence creating a level of "artificial" money)

I agree with your statement having a Euro-division in the NHL is a no-no for most of the reasons you bring on.

Not only are their the cultural clashes, also there are two opposite sport-systems in place.

Furthermore it surprises me everyone that holds a management position is bragging about how important it is to do good to the environment. Only to follow this up with such a comment of expanding to Europe which will increase the number of polluting flights big time.

Just the ticket price reason you mentioned can be ignored IMO. Whether the money comes from ticket sales or sponsors doesn't really make a difference I guess. After all it's all money.

You'd probably bring in the fact that as soon as an owner pulls the plug the team will collapse. But on the other end the European teams have tradition and will never move like North American franchises and thus will always have their value in town. There's no longer a need to find strong market cities in Europe as history has already proven this.

Just to point out a small error in your #1 point. You would be totally surprised to know that there are hundreds of billionaire ex-communists in Russia... who would think nothing of spending tens of millions of dollars on a single piece of art work. These guys aren't messing...an NHL team would be like buying candy! They like nothing better than indulging in their hobbies with their wealth. Secondly, UEFA had the right idea with the champions league...I think something along these lines could work for NHL expansion to Europe!